Following a £1,000,000 investment by the former Conservative-led Isle of Wight council, the tidal array demonstration site and development centre was due to be built in 2015/2016.
The scheme received approvals in 2016, but answers to Cllr Lilley’s questions now reveal the project is now on hold.
Below are the questions asked and answers received from officers at Isle of Wight council.
Grant bid “unlikely to succeed “
1. Did PTEC ( or any partner organisation) submit a bid for a contract for difference grant in the government’s second allocation round which closed for applications on 21st April? If not, why not?
It is suggested this query be directed to the company. The council was not involved with any bid from PTEC.
We are aware however that the company did not submit an application, as the government had not ring fenced monies for wave and tidal, so as a consequence it has been realised by the tidal industry as a whole that any application would be unlikely to succeed as they could not compete with any offshore wind bid, with offshore wind being likely to oversubscribe the monies available.
2. What are the latest estimated dates for:
a) Commencement of onshore and off shore construction.
b) Completion of onshore and offshore construction.
c) Full operation of the tidal project.
All dates are in abeyance due to the Contract For Difference situation.
The PTEC and the industry as a whole are lobbying the government to come up with an alternative financial support scheme to allow this industry to grow beyond its current early development situation. Several avenues are being explored.
The project is ready to go with all relevant permissions in place – although some shore based planning permissions are under some time pressure – but it would be considered unwise to move on from this point without the financial support mechanism in place.
£1 million investment an unsecured loan
3. What will happen to the IW Council’s £1 million loan to PTEC Ltd if the scheme is delayed and how is it secured?
The company is required to repay the council’s loan before repaying loans to private investors or dividends on earnings.
In paragraph 49 of the report to Cabinet – its said
“There is a risk that the council will not recover any or all of its investment in the SOEC project should it not become a fully operational facility. This will only become clear at the end of phase 1 of the project when consenting is completed and further debt and equity have been confirmed for the project.
“The works completed at the end of phase 1 are however still likely to have a value and could generate a financial receipt if others were prepared to acquire these assets and take the project forward. The value to the council would be further enhanced as it would still own the option to take the lease of the seabed for phase 2 of the project. Para 50 goes on to say – Even if the project proceeds it is possible that its earnings may not be of the expected scale to provide the projected returns to the council.
“The council would however be the first of the investors in the project to have its initial loan investment repaid and this does increase the likelihood of it recovering at least its initial investment in the project. The council’s primary concern however, has always been to secure the wider economic benefits of SOEC for the good of the island’s economy and therefore the creation of SOEC could be seen as a success in its own right before the return on the council’s investment in the project is taken account of.”